Budget 30th October 2024
Labour’s manifesto pledged not to increase income tax, national insurance, and VAT, and so Chancellor Reeves had to raid other taxes, like capital gains tax (CGT) and inheritance tax (IHT to find the £40bn needed to balance the books.
Reeves announced that there will no longer be biannual fiscal events. The Budget will now only be in the autumn, while the Spring Statement will have no tax changes.
Non-Dom regime
The non-dom regime is being scrapped from 2025 and replaced with a new residence-based scheme “with internationally competitive arrangements for those coming to the UK on a temporary basis”.
Stamp duty for non-UK residents
Labour will increase the Stamp Duty surcharge for non-UK residents from 2% to 3%.
Triple lock pension
Labour will keep the triple lock on pensions and will increase the state pension by the highest of inflation, average earnings or 2.5%.
Abolition of the Furnished Holiday Let (FHL) regime
Labour has confirmed they will go ahead with the Conservative’s plans to abolish the Furnished Holiday Lettings (FHL) regime with effect from April 2025.
National Minimum Wage (NMW)
The UK’s National Minimum Wage and National Living Wage will be increasing from 1 April 2025 as follows: For those aged 21 and over a 6.7% increase from £11.44 per hour to £12.21 per hour, meaning an individual working 40 hours a week will now be earning around £25,500 per annum.
For those aged 18 to 20: a 16% increase from £8.60 per hour to £10 per hour, meaning an individual working 40 hours a week will be earning around £21,000 per annum.
For qualifying apprentices: an 18% increase from £6.40 per hour to £7.55 per hour, meaning an individual working 40 hours a week will be earning around £16,000 per annum.
VAT on school fees
VAT on private school fees will be applied from 1 January 2025 with any payments made in advance of this date in respect of the January term also expected to attract VAT.
Employer National Insurance Contributions
National insurance contributions will increase by 1.2% to 15%.
This increase is to be combined with a lowering of the threshold for employer’s national insurance from £9,100 to £5,000, but to soften the blow, the employment allowance was increased from £5000 to £10,500. This tax increase is expected to raise £20bn, the largest amount of any of the changes announced.
Reeves also turned her attention to capital gains tax, where she increased the higher rate from 20% to 24% and the lower rate from 10% to 18%
The non-dom regime is being scrapped from 2025 and replaced with a new residence-based scheme “with internationally competitive arrangements for those coming to the UK on a temporary basis”.
Reeves decided against extending the freeze on personal tax thresholds for a further two years, instead announcing that from 2028 to 2029 personal tax thresholds will be updated in line with inflation.
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Capital Gain Tax (CGT)
The basic rates will rise from 10% to 18% from 2025.
The higher rates will rise from 20% to 24%
Residential property rates will remain at 18% and 24%
Inheritance Tax (IHT)
Nil rate thresholds are extended until 2030.
Inherited pensions will become subject to IHT from 2027
Enterprise Investment schemes
EIS and VCT schemes as already announced, extended to 2035
Duties
Increase to Vape liquor tobacco and soft drinks levy
Electric vehicle incentives to be maintained
Corporation tax
Corporation rate remains at 25% as well as full expensing + Annual Investment Allowance.
Fund management
Carried interest gains are to be taxed at 32% from April 2025 and more specific reforms are to be introduced in 2026.
Stamp Duty Land Tax
Higher rates on additional dwellings increase by 5% from 31 Oct
Source: gov.uk